The NCUA strongly recommends the organizing group establish mentor relationships with one or more existing credit unions and seek out other assistance in and outside the credit union industry. These relationships have proven to be beneficial to organizing groups going through the chartering process and during the first years of operation. A list of the available resources is shown below, followed by some information on each resource.
- Credit Unions
- Sponsors
- Individuals
- Credit union leagues or associations
- Corporate credit unions
- Other credit-union-affiliated organizations
- Banks
- Other government entities
Mentor Credit Union
A mentor credit union is typically an established, financially sound, well-managed credit union whose assistance can be invaluable in helping you develop a successful business plan and pro forma financial statements. Ideally, seek out a credit union mentor with the same FOM type as the PFCU. It is helpful to establish a mentor relationship with another well-managed credit union that uses the same data processing system. You can research existing credit unions here.
Mentor credit unions may offer to:
- Assign an individual executive or staff member to assist the organizer and subscribers;
- Answer questions and provide direction and guidance;
- Attend organizer meetings and/or board meetings after chartering;
- Assist and educate subscribers, organizers, and staff in understanding what it takes to start-up and run the daily operations, the processes involved, and necessary costs;
- Review or assist with developing reasonable assumptions for the pro forma financial projections;
- Provide sample policies and procedures or assistance in reviewing the drafts;
- Assist in resolving application deficiencies, including, for example, a business plan, financial statement projections, marketing development, or policies;
- Train staff and officials (such as directors, supervisory committee members, and credit committee members) on their specific duties and responsibilities;
- Train staff on the mentor’s data processing system (if the same system is to be used by the PFCU);
- Identify reputable vendors serving the industry for proposed products and services;
- Assist in negotiating contracts;
- Provide office space, fixed assets, or back-office support at low or no-cost;
- Subsidize operating expenses; or
- Make a low or no-cost non-member deposit.
Best practices for building a strong credit union mentor relationship include:
- Identify goals and objectives (such as a timeline for accomplishing specific steps);
- Identify the amount of time the subscribers and/or organizers will be able to commit to each step and the type and time of estimated assistance needed;
- Identify a method for keeping mentors updated on progress (such as weekly calls, monthly meetings, and similar activities);
- Select the subscribers, organizers, officials, or staff whose experience will most effectively complement the mentoring goals and objectives; and
- Document each party’s role, the expected outcome, and timeframe.
After a mentor relationship has been established, it is important the PFCU obtain a written acknowledgement. Often mentors are volunteering time and resources, and a written acknowledgement letter will provide evidence of the mentor’s intent to assist the PFCU. Describe the mentor relationships and provide copies of the written acknowledgement letters in the application. At a minimum, the written acknowledgements should:
- Identify the steps, actions, or services the mentor will provide to assist the PFCU once chartered;
- Specify how the mentor will provide the specified actions or services;
- Discuss the length of time the actions or services will be provided;
- Explain any conditions for continued involvement with the PFCU;
- Identify the name and contact information of the specific individual(s) providing the assistance, and
- Include any other pertinent information.
Sponsor
A sponsor is usually a company or organization within the PFCU’s FOM. A sponsor could assist the PFCU with monetary support (such as donations for start-up costs, capital, or operational costs after chartering), non-monetary support (for example, the purchase or donation of furniture, computers, or other assets), or subsidies (like free office space, use of company copier, or access to legal department staff).
Individuals
Individuals can also support the PFCU by donating their time or funds that can go towards covering the chartering process and costs (membership survey, legal reviews), start-up costs for the new credit union (equipment, furniture, supplies), or operational costs after chartering.
Credit Union Leagues or Associations
These are trade associations for credit unions. Located in most states, these associations provide a wide variety of services, such as education, training, and small credit union consulting. Some may provide products and other services, such as form purchasing, audits, legal consultation, or guidance on compliance with regulations. Some may also provide hands-on assistance with the charter application steps. Examples of how leagues and associations might assist in the chartering process include:
- Answering questions;
- Identifying training needs and available educational or training resources for staff and officials;
- Providing sample policies and procedures;
- Identifying vendors serving the credit union industry for bond coverage, insurance, purchasing supplies, and similar services;
- Identifying potential mentor credit unions in the area;
- Providing human resource guidance, such as job descriptions, advertising positions, interviewing, or salary surveys.
Most leagues and associations have websites that contain helpful information about the credit union industry. Some leagues have consolidated and serve a region of multiple states. Leagues can be located by performing an internet search.
Corporate Credit Unions
Corporate credit unions are credit unions for credit unions. They can serve state, regional, or nationwide fields of membership and offer a wide variety of services, including share draft (checking) accounts, investments, wire transfer services, check, and other member processing functions. Search for corporate credit unions by selecting “Corporate credit unions” under the “Field of Membership Type” drop-down.
Other Credit-Union-Affiliated Organizations
Credit-union-affiliated organizations may be able to assist or answer questions or assist PFCUs with the chartering process for a community development or low-income credit union.
Banks
Banks sometimes provide assistance to PFCUs that will be low-income- designated once chartered to help comply with the bank’s Community Reinvestment Act requirements. Such assistance could be in the form of non-member deposits, grant money, office equipment, or other support.
Other Government Entities
Local, state, and possibly federal government agencies may also provide assistance to PFCUs.
Documentation Required for Established Mentor and Other Supporter Relationships
- Identify all mentor relationships and include copies of the written acknowledgement letters. The written letters should:
- Identify the steps, actions, or services the mentor will provide to assist the organizing group of the new federal credit union once chartered;
- Specify how the mentor will provide the specified actions or services;
- Discuss the length of time the actions or services will be provided;
- Explain any conditions for continued involvement with the PFCU;
- Identify the name and contact information of the specific individual(s) providing the assistance; and
- Include any other pertinent information.